Ninth Circuit Upholds a $1 Million Punitive Damages Award in Racial Harassment Case

Volume 1, Issue 4
Winter 2001

On October 24, 2001, the Ninth Circuit Court upheld a $1 million punitive damages award in a racial harassment case that it warned "should serve as a reminder to employers of their obligation to keep their workplaces free of harassment."

Troy Swinton was the only African American among 140 employees at a company that manufactured matting for picture frames. For the six months he worked at the company, Swinton was regularly subjected to racially offensive "jokes" by a supervisor at the plant (the primary harasser), who was not Swinton's boss but who happened to be Swinton's fiancee's uncle. Some of Swinton's co-workers also engaged in racial jokes, admitting that racially hostile comments were made, not only about African Americans, but also Asians, Poles, gays, Jews, and Latinos.

Swinton alleged that his immediate supervisor, Stewart, witnessed the comments and laughed along. Swinton said he heard the epithet "nigger" more than fifty times. Ultimately, he left his position. Swinton never reported the harassment through the company's internal complaint procedures, partly because his supervisor witnessed the events and failed to take action.

A jury returned a verdict for Swinton, awarding him $5,162 in back pay, $30,000 in emotional distress damages, and $1 million in punitive damages. Swinton's claim was based upon state law anti-discrimination statutes and a 42 U.S.C. Section 1981 claim of race discrimination, rather than Title VII of the Civil Rights Act of 1964. Punitive and compensatory damages under Section 1981 are not "capped", as with Title VII.

The employer argued that it should be entitled to the affirmative defense to employer liability for harassment by supervisors established by the United States Supreme Court in Faragher v. City of Boca Raton and Burlington Industries, Inc. v. Ellerth. The Ninth Circuit Court, however, reminded employers that the Farrager-Ellerth affirmative defense is applicable only when the harasser is a supervisor with immediate or successively higher authority over the person harassed. Thus, while the primary harasser was a supervisor, he was not the Plaintiff's supervisor, negating use of the affirmative defense. The Court analyzed the case as a co-worker harassment case, in which a plaintiff must show that the employer knew or should of known of the harassment and failed to take reasonably prompt corrective action.

The employer also argued that while Stewart was Swinton's immediate supervisor, he was a low-level supervisor and not part of management and thus his knowledge could not be imputed to the company. In response, the Court stated that employees who either: (1) possess substantial authority and discretion to make decisions to the terms of the harasser's or harassee's employment; or (2) have an official or strong de facto duty to act as a conduit to management for complaints about work conditions will be viewed as a member of management for the purposes of imputing their knowledge to the company under Title VII. The Court found that Swinton's immediate supervisor fell under the second, less onerous standard because by the terms of the company's employee manual, his supervisor was charged with accepting reports of harassment.

In trying to avoid the imposition of punitive damages, the employer again argued that Swinton's immediate supervisor's low-level supervisory status should be a factor in determining whether his inaction should be imputed to the company. The Ninth Circuit Court dismissed this argument and firmly held that even the inaction of a relatively low supervisor may be imputed to an employer if they are responsible pursuant to company policy to receive and act upon harassment complaints, which Swinton's immediate supervisor was.

Furthermore, while employers can avoid being held vicariously liable for punitive damages as a result of the actions of its managerial agents if the agents' actions are contrary to the employer's good faith efforts to comply with Title VII, the Ninth Circuit found that the employer was not entitled to a good faith finding because it merely published an anti-harassment and did nothing to implement it.

This decision points out the damage that an untrained, insensitive, and unresponsive supervisor can do to a company, and a reminder to pay particular attention to (a) ensuring no-harassment policies include forms of harassment other than sexual harassment, (b) deciding which individuals, including supervisors, are charged under the no-harassment policy with receipt and response to harassment complaints, and (c) training all employees in the prohibitions against harassment and their own responsibilities.

Swinton v. Potomac Corporation, 270 F.3d 794 (9th Cir. October 24, 2001)

KZA Employer Report articles are for general information only; they are not intended and should not be construed to be legal advice. Reading or replying to such articles does not establish an attorney-client relationship. In addition, because the subject matters and applicable laws discussed in Employer Report articles are often in a state of change and not always applicable to every type of business entity or organization, readers should consult with counsel before making decisions based on the same.